GRAINS-Soybeans extend gains on China demand optimism; wheat climbs 2%

By Julie Ingwersen

CHICAGO, Feb 12 (Reuters) - Chicago soybean futures climbed to a two-month high on Thursday on hopes that a potential thaw in U.S. trade relations with top global soy buyer China could spur fresh purchases of the oilseed, analysts said.

Wheat futures hit their highest in nearly three months on chart-based buying and short-covering, and corn followed the firm trend.

As of 12:01 p.m. CST (1801 GMT), Chicago Board of Trade March soybean futures SH26 were up 9-3/4 cents at $11.33-3/4 per bushel, after reaching $11.41-1/2, the contract's highest since December 2.

CBOT March wheat WH26 was up 12-3/4 cents at $5.50 a bushel and March corn CH26 was up 3 cents at $4.30-1/2 a bushel.

Soybeans, and the prospect of more demand for U.S. supplies, remained in the spotlight. Futures surged last week when U.S. President Donald Trump said that China had increased its target for U.S. soybean purchases under a trade truce agreed in late October.

Expectations were further boosted by a report in the South China Morning Post that said Trump and Chinese President Xi Jinping could extend their countries' trade truce for as long as a year at a meeting in early April.

"Both leaders have something to gain ... by a short-term deal that benefits them at home as they seek to cling to their power. That means that we could see a deal that moves commodities to China," StoneX chief commodities economist Arlan Suderman said in a client note.

The bullish enthusiasm offset pressure from rising estimates of the soy harvest in Brazil, the world's biggest supplier.

Brazilian crop agency Conab on Thursday raised its estimate of the country's soybean crop to a record 177.98 million metric tons, from its January forecast of 176.12 million. The U.S. Department of Agriculture this week raised its view of Brazil's crop to 180 million tons.

Neighbouring Paraguay is on track to produce a record soy harvest of more than 10 million tons, analysts and producers said.

Meanwhile, weekly U.S. soybean export data fell below trade expectations . The USDA reported net sales of old-crop U.S. soybeans in the week ended February 5 at 281,800 tons, a low for the 2025/26 marketing year that began September 1.

Weekly U.S. corn export sales were huge, topping 2 million tons, above a range of trade expectations for 600,000 to 1.5 million tons.

Still, CBOT corn futures Cv1 lagged the gains in soybeans and wheat, anchored by massive U.S. and global grain supplies.

CBOT wheat futures Wv1 surged more than 2% on bargain buying and short-covering, despite a lack of supportive news.

Managed commodity funds hold a large net short position in CBOT wheat futures, leaving the market prone to short-covering rallies.

"The (wheat) market has been so bearish, for so long, that something like this was bound to happen," said Jack Scoville, a commodities analyst at The Price Futures Group.